On January 18th, the National Assembly passed the Law on Credit Institutions (Law on Credit Institutions 2024), which will come into effect on July 1st, 2024. The Law on Credit Institutions 2024 has added regulations on payment agency activities as prescribed by the Governor of the State Bank of Vietnam (SBV).

On June 21, the Governor of the State Bank of Vietnam issued Circular No. 07/2024/TT-NHNN (Circular 07) regulating payment agent activities.

The circular consists of 4 chapters and 14 articles, which specifically regulate payment agency activities, the contents of payment agency activities, transaction limits, the activities of the principal and the agent, the principles of implementing payment agency activities, payment agency contracts, rights and obligations of the parties, etc.

According to Circular 07, payment agency activities refer to the act of the principal authorizing the payment agent to perform part of the process of opening payment accounts, issuing bank cards, and providing payment services to customers.

The payment agent includes commercial banks, cooperative banks, and branches of foreign banks.

The principal is entrusted by the principal with performing certain tasks, including:

Receive payment account opening applications, check and verify customer identification information to send to the principal/agent, and instruct customers on how to use the payment account;

Receive bank card issuance applications, check and verify customer identification information to send to the agency, and instruct customers on how to use the bank card;

Receiving customer requests for payment services, preparing, signing, controlling, and processing customer transaction documents, transferring customer transaction information to the principal, receiving cash from customers or paying cash to customers to complete transactions.

The principal must have measures in place to manage the balance and transaction limits of the agent (another organization), including: Transaction limits for individual customers, a maximum of 20 million VND/customer/day.

Each payment agent point is only allowed to process transactions of no more than 200 million VND per day and a maximum of 5 billion VND per month.

W-SHB Bank_39 Nam Khanh.jpg
Illustrative photo. (Nam Khánh).

The activities of commercial banks, cooperative banks, branches of foreign banks, people's credit funds, and microfinance institutions involving agency arrangements must comply with the content stated in their establishment licenses.

People's credit funds can act as agents for the Cooperative Bank for their members and customers.

Microfinance institutions can act as agents for banks with respect to their own clients.

Another organization is a legally established business entity that acts as an agent under an agreement with the principal.

Commercial banks, cooperative banks, branches of foreign banks, and microfinance institutions are allowed to act as agents for multiple principals. Other organizations are only allowed to act as agents for one principal.

The circular takes effect from July 1st, coinciding with the official entry into force of the Law on Credit Institutions of 2024.

The State Bank of Vietnam (SBV) stated that the issuance of the Circular regulating payment agency activities aims to complete the legal framework (implementing and guiding the Law on Credit Institutions 2024), in line with the National Comprehensive Financial Strategy to 2025, with a vision to 2030; to meet the practical requirements of payment agency activities in Vietnam in the coming time, as well as to grasp the development trends of the payment sector worldwide , and the strong and widespread development of information and telecommunication technology today.

At the same time, the issuance of the Circular also meets the objective of state management over the payment agency activities of banks and branches of foreign banks; aiming towards the goal of inclusive finance, creating conditions for payment services to reach rural areas, remote areas, and islands.

Tuan Nguyen